Senate GOP Leader Len Fasano is in talks with Lamont. Rep. Themis Klarides, his House counterpart, is keeping her distance.
Sen. Len Fasano and Rep. Themis Klarides, the GOP leaders at center, call for a special session. mark pazniokas / ctmirror.org

Republicans and Democrats dug in Wednesday on whether Connecticut law clearly defines what is a meal subject to the sales tax. At issue is the impact of two words in the new budget, “grocery store,” on a longstanding interpretation by state tax collectors of one word, “meal.” 

GOP leaders pressed for a special legislative session to correct what they insist is a badly written law that is about to make certain groceries subject to the sales tax for the first time, while Democrats say the Republican minority is playing politics.

A provision of the budget adopted in June does two things: Effective on Oct. 1, it increases the sales tax on meals by one percentage point, from 6.35 percent to 7.35 percent; and it explicitly lumps in grocery stores with restaurants and caterers when it comes to the taxation of meals.

The definition of meal is unchanged and requires a mere 25 words in state law: “ ‘Meal’ means food products which are furnished, prepared or served in such a form and in such portions that they are ready for immediate consumption.” 

The law then offers 28 words of additional guidance: “A meal as defined in this subsection includes food products which are sold on a ‘take out’ or ‘to go’ basis and which are actually packaged or wrapped.”

The intent of the new law is to raise the tax on meals, whether sold at a restaurant or grocery store, Gov. Ned Lamont has said. The goal is finding new revenue, while underscoring the need to treat sellers of meals equitably.

Since 2002, the Department of Revenue Services has collected the sales tax on certain foods deemed to be meals at grocery stores. For example, a sandwich purchased at a deli counter or a cup of coffee at a store snack bar long has been taxable.

With the inclusion of “grocery store” in the list of eating establishments covered by the sales tax on meals, the DRS has issued a five-page policy statement that advises grocery retailers that some bulk items are now taxable under certain circumstances.

Whole loaves of bread and whole cakes and pies still are considered non-taxable bulk items, while whole cooked chickens, racks of ribs or trays of pasta are considered food items for immediate consumption and are subject to the sales tax.

Many foods packaged in small sizes now would be taxable for the first time: ice cream, less than a pint; lettuce or other salad greens, less than 8 ounces; doughnuts, muffins and other pastries, five or fewer; prepackaged bags of five ounces or less of chips, popcorn, nuts or trail mix. 

Lamont says the DRS overreached in that assessment of what is taxable, and new guidance to grocery retailers will be issued shortly.

Senate Minority Leader Len Fasano, R-North Haven, and House Minority Leader Themis Klarides, R-Derby, said Wednesday that the commissioner of revenue service correctly interpreted what they say is a badly written law.

“This commissioner did what was right,” Fasano said. “This commissioner read it the way it should be read, and there is no argument about that. That’s not what we meant. Let’s go into special session and fix this.”

The Republicans are circulating a petition among lawmakers to call themselves into special session. To be successful, they need a majority of members in both chambers to sign on.

Klarides suggested the Democrats are being disingenuous, acting “shocked and appalled by what they wrote.”

What they wrote was the imposition of a one-percent increase in the sales tax: 

“With respect to the sale of meals… sold by an eating establishment, caterer or grocery store; and spirituous, malt or vinous liquors, soft drinks, sodas or beverages such as are ordinarily dispensed at bars and soda fountains, or in connection therewith.”

The new budget provision referenced the definition of “meal” that already is in state law and did not revise it.

Democrats say that means that the Lamont administration is free to amend the public policy statement recently issued by DRS.

“Our members have been very clear on what the intent of the budget is and our position on DRS’ policy guidance,” said House Speaker Joe Aresimowicz, D-Berlin. “Based on the remarks from Gov. Lamont and his administration, we expect that they are going to move quickly to fix this misinterpretation. 

“Should this issue not be resolved efficiently, then we will take the necessary steps in the legislature to ensure that our legislative intent is followed.”

Senate President Pro Tem Martin M. Looney, D-New Haven, said, “The call for a special session is just the Republicans being alarmist and grandstanding.”

Mark is the Capitol Bureau Chief and a co-founder of CT Mirror. He is a frequent contributor to WNPR, a former state politics writer for The Hartford Courant and Journal Inquirer, and contributor for The New York Times.

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5 Comments

  1. The GOP is correct in calling for a special session. The budget language needs to be corrected, pure and simple. The Dems need to suck it up and fix it. Yeah it hurts for them, but it is the right thing to do…

  2. The legislative language was a bit sloppy…but the intent was still clear from various summaries, fiscal notes, OFA analyses etc. With the deference afforded to administrative pronouncements such as this policy statement, and the judicial standards for how any statutory ambiguity should be resolved (in this case should be for the taxpayers as an imposition statute), I think just clarifying the policy statement is sufficient. It just seems like political grandstanding and a bit petty imo to demand a special session for this issue. Can be appropriately handled by administrative pronouncement for now and cleaned up next session if desired.

    1. Perhaps it can be handled by executive order for now. But when the usual session opens, this issue will take a back seat to whatever other ‘hot button’ topics come up and will be forgotten and never make it to the floor.
      Interpretation of written law can be subjective and leaving to another agency even more so.

  3. I keep seeing quoted ” a 1% increase in the sales tax” which is true however the real increase to the people who are paying is actually a 15.7% increase i.e. 6.35% to 7.35% is 1/6.35 = 15.7 % . The effect is a 15.7 % increase in what the people pay in sales tax on items already taxed never mind the new items added at 7.35%.Outrageous!

  4. The leadership in both the House and Senate have been doing stuff like this for their whole careers. Anyone recall the Hartford bailout in Dan Malloy’s last year? $40-$50 million became $450-$750 million and the legislature shrugged and said, “we did not vote for that”.
    What a pathetic state.

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